RESCUING THE TRADE TALKS

February 2, 1991

EUROPE IS now beginning to move toward serious and profound agricultural reform -- which is ironic. It has been Europe's refusal even to discuss its grossly excessive farm subsidies that have pushed the international trade negotiations to the brink of failure. It still may be possible to rescue the trade negotiations, and a change of attitude in Europe can only help. That's a possibility to be seized with both hands.

Since World War II, the repeated rounds of worldwide trade negotiations have tremendously expanded trade, and trade has turned into one of the great forces driving the world's economic growth. But the current round -- known as the Uruguay Round, since it began there -- is more ambitious and riskier than its predecessors. It was designed to get into a range of subjects, especially agriculture, that the negotiators had been avoiding because of their intense political sensitivity. Most countries wanted to end the pernicious practice of dumping farm products, which means using subsidies to sell them at low prices in foreign markets. But the European Community has vehemently resisted, because it has no other way to get rid of the huge surpluses that its too-high farm supports generate.

The European Community's refusal even to discuss its farm subsidies has brought the talks to a deadlock, and the effective deadline, set by American legislation, is March 1. Now, with less than a month in which to maneuver, the European Commission has adopted at least an outline for reform. This change of heart is owed chiefly to the cost of the farm subsidies, which is suddenly surging out of sight again.

It will unfortunately take months, and perhaps years, to translate this preliminary outline into a coherent negotiating position. Any movement toward cuts in farm support prices will set off a tremendous quarrel in Europe. The question for all the other trading countries is whether to accept this preliminary and hesitant movement by the Europeans as a basis for compromise or to let the negotiations collapse altogether.

It's a time for compromise. The Uruguay Round can no longer produce the benefits that seemed possible as recently as last fall. But even half a loaf -- or, more likely, a quarter of a loaf -- is worth having. Collapse of the talks would invite a deluge of protectionist legislation here in the United States and in many other countries. But even a watery and unsatisfying compromise can encourage wider trade and preserve the opportunity for a bigger and better deal later in this decade, when the European Community finally acknowledges that it has to get its farm costs, and farm politics, under control.